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High Deductible Health Plan Dollar Amounts for 2015

For high deductible health plans related to health savings accounts, the annual deductible must be at least $1,300 for self-only coverage and $2,600 for family coverage, and annual out-of-pocket expenses cannot exceed $6,450 for self-only coverage and $12,900 for family coverage.

IRS Announces Indexed Welfare and Fringe Benefit Plan Amounts for 2015

In Revenue Procedure 2014-61, the IRS announced indexed amounts for 2015. Among other limits, the dollar limitation on employee pre-tax payroll contributions to health flexible spending arrangements will increase to $2,550. The monthly qualified parking fringe benefit exclusion amount will be $250, while the commuter highway vehicle and transit pass amount will be $130. A “high deductible health plan” must have, for self-only coverage, an annual deductible between $2,200 and $3,300, with annual out-of-pocket expenses of not more than $4,450, and for family coverage, an annual deductible between $4,450 and $6,650, with annual out-of-pocket expenses of not more than $8,150. IRS Revenue Procedure 2014-61 can be found here.

“Minimum Value” Plans Must Provide Substantial Coverage for Hospitalization and Physician Services

The Department of Treasury and the Department of Health and Human Services (the “Departments”) issued IRS Notice 2014-69 stating that health plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or both) do not provide the “minimum value” that is required by the Patient Protection and Affordable Care Act. Proposed regulations to that effect are expected to be issued in 2015. Employers are unable to rely solely on the minimum value calculator to demonstrate that plans provide minimum value for any portion of any taxable year ending on or after January 1, 2015, following finalization of the regulations. The Departments did provide limited grandfathering solely in the case of an employer that has entered into a binding written commitment to adopt, or has begun enrolling employees in, such plans prior to November 4, 2014. Employers maintaining such grandfathered plans will not be subject to… Continue Reading

DOL Information Letter Provides Companion Guidance to IRS Notice 2014-66

The U.S. Department of Labor (the “DOL”) released an Information Letter coincident with the IRS’s issuance of Notice 2014-66, confirming that the inclusion of unallocated deferred annuity contracts as fixed income investments within a series of TDFs as described in Notice 2014-66 would not cause the TDF series to fail to comply with the qualified default investment alternative rules applicable to TDFs under ERISA. The selection of unallocated deferred annuity contracts within a TDF series will satisfy the DOL’s annuity selection safe harbor under ERISA (the “Annuity Safe Harbor”) if the plan sponsor prudently selects and appropriately monitors the investment manager and the investment manager meets each condition of the Annuity Safe Harbor. Plan sponsors of defined contribution plans offering TDFs that include deferred annuities for older participants should carefully review Notice 2014-66 and the DOL Information Letter to ensure that their TDF arrangements meet the conditions discussed in each.… Continue Reading

CMS Announces Indefinite Delay in Enforcement of HPID Regulations

The Centers for Medicare & Medicaid Services (“CMS”) announced the indefinite delay of its enforcement of the requirement that health plans obtain and use a Health Plan Identifier (“HPID”) in HIPAA transactions. Certain health plans had been required to obtain a HPID by November 5, 2014. The enforcement delay applies to all HIPAA covered entities, including health plans and healthcare providers. The CMS announcement is available here.

Putting the Genie Back in the Bottle: Fifth Circuit Finds Breach of Express Warranty to Repair Not Excluded by the “Contractual Liability” Exclusion

The Fifth Circuit Court of Appeals has held in Crownover v. Mid-Continent Casualty Company that a contractor’s breach of an express warranty to repair does not constitute an “assumption of liability in a contract or agreement” for purposes of the “contractual liability” exclusion found in most general liability policies. Once upon a time, insurers, insureds and courts understood that the “contractual liability” exclusion, which applies to damages the insured is obligated to pay by reason of the “assumption of liability in a contract or agreement,” is triggered only “when the insured assumes responsibility for the conduct of a third-party” in an indemnity or hold-harmless agreement.[1]  In Gilbert in 2010 and in Ewing in January of this year, the Texas Supreme Court adopted a new legal construct: “‘assumption of liability’ means that the insured has assumed a liability for damages that exceeds the liability it would have under general law.”[2] Since this new standard… Continue Reading

Fifth Circuit Adopts the “Narrow View” of Governing Plan Documents

Upon request by a participant or beneficiary, a plan administrator must furnish copies of summary plan descriptions, contracts, etc., and “other instruments under which the plan is established or operated.” Failure to comply with the request may result in a penalty of up to $110 per day. Before this case, the Fifth Circuit had not addressed the scope of the “other instruments” catch-all phrase. Some circuits have interpreted this phrase broadly, although the majority of courts read it narrowly to apply to only “formal legal documents” that govern a plan. In an unpublished opinion, the Fifth Circuit applied the “narrow view” and found that, because the appellants failed to sufficiently plead that the investment guidelines were binding or mandatory with respect to the plans at issue, the investment guidelines were not required to be disclosed. Murphy v. Verizon Commc’ns, Inc., No. 13-11117 (5th Cir. Oct. 14, 2014) (unpublished).

IRS Announces 2015 Qualified Pension Plan Limits

The IRS recently announced cost-of-living adjustments for 2015. The following list describes some of the key limits that will apply to employer qualified retirement plans in 2015. The annual limit on elective deferrals for employees who participate in 401(k) and 403(b) plans will increase from $17,500 to $18,000. The limit for annual additions to defined contribution plans will increase from $52,000 to $53,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k) and 403(b) plans will increase from $5,500 to $6,000. The annual benefit limit under a defined benefit plan remains unchanged at $210,000. The dollar limit on compensation for defining a “key employee” in a top heavy plan remains unchanged at $170,000. The dollar limit on compensation for defining a “highly compensated employee” will increase from $115,000 to $120,000. The annual limit on compensation taken into account when calculating a participant’s benefit accruals will… Continue Reading

Application of the HIPAA Privacy Rule to Same-Sex Marriages

The U.S. Department of Health and Human Services (“HHS”) issued guidance explaining that for purposes of the HIPAA privacy rule, the term “spouse” includes individuals who are in a legally valid same-sex marriage sanctioned by a state, territory, or foreign jurisdiction; the term “marriage” includes both same-sex and opposite-sex marriages; and the term “family member” includes dependents of those marriages. Legally married same-sex spouses, regardless of where they live, are family members for the purposes of applying rules permitting HIPAA covered entities to share an individual’s protected health information with a family member of the individual. The HHS guidance can be found here.

IRS Simplifies Procedures for Electing Tax Deferral on Canadian Retirement Plan Accrued Income

The IRS recently issued Revenue Procedure 2014-55, which simplifies the reporting obligation and method to obtain the deferral of U.S. taxation on interests held by U.S. taxpayers in Canadian Registered Retirement Savings Plans (“RRSPs”) and Registered Retirement Income Funds (“RRIFs”). Previously, to defer U.S. taxation on income accruing in their RRSPs and RRIFs to the date of distribution, U.S. taxpayers were required to file Form 8891 with the IRS, which many taxpayers failed to do. The IRS has eliminated Form 8891, as well as the requirement that taxpayers file this form for future and most prior tax years. U.S. taxpayers may generally qualify for favorable tax treatment under the Revenue Procedure so long as they continue to file U.S. tax returns for any year in which they hold an interest in a RRSP or RRIF and include any distributions as income on their U.S. tax returns. A copy of the… Continue Reading

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